Financial Products
In the previous blog post we discussed how Medicaid treats primary residences in terms of eligibility and the availability of the home equity as an asset. Aside from real estate, let’s take a look at what financial products will be considered when determining Medicaid eligibility.
Medicaid’s definition of countable assets includes almost any financial product, including IRAs, 401(k) accounts, retirement accounts, certificates of deposit, stocks, bonds, and annuities, to name a few. Medicaid will count the value of these accounts as of the date of requested Medicaid eligibility.
Retirement accounts almost always will count as an asset, with a few exceptions. For example, in some states if a community spouse has a retirement account, it will not be counted as an asset.
Bank and credit union accounts are also countable, including checking, savings, Money Market, and Certificates of Deposit (CDs). CDs still count as an asset, even if they haven’t matured.
In addition, some life insurance policies also have a countable value. Medicaid doesn’t count the face amount since that amount is only payable upon death. What they do count is the cash surrender value.
As defined by Investopedia, “The cash surrender value is the sum of money an insurance company pays to a policyholder or an annuity contract owner in the event that their policy is voluntarily terminated.” Because those funds are available upon request, Medicaid will count them as available to pay for care. As a rule of thumb, most term life polices do not have a cash value, while most whole life policies do.
The asset limits for single and married people apply to every financial product the person owns. So even with the bank account balances below the limit, life insurance cash values or other financial products could prevent eligibility.
There are several exceptions to the rules and it’s hard to know for sure what’s countable and what’s not. Consulting with a Medicaid Planner can save you money and stress when it comes to determining Medicaid eligibility.
